Is there ANY market price at which you would feel that this company no longer warranted a
sell-put/buy-call-or-leap strategy, a price at which you would become seriously concerned about the future of your
holdings in such a company?
I do believe there IS a price at which a company will no longer warrant a buy. My feeling is that CSCO is approaching that number. Of course one should never bet against CSCO, but the valuation of that company, with the growth rate they have to maintain, is hard for me to swallow. Can you imagine the price double in a year?
If the answer is yes, how would you arrive at such a price or valuation level?
I would look at their market, the growth potential of that market, the potential that was already priced into the stock. I would look to see if that stock can double or triple, and still have a reasonable price/vision ratio. If CSCO triples, it would have the combined value of CSCO, MSFT and GE today! I just do not see that happen in the next several years.
That is not saying much, but market valuation of these stocks are beyond reasonable in my opinion. You are asking some good questions. But the question I will first try to answer is "Do other people think this stock is overvalued?"
The answer to this question will determine the short term price trend. |
